Genting M'sia down 4% after failing to get upstate New York casino licence

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KUALA LUMPUR (Dec 18): Genting Malaysia Bhd fell as much as 4.42% after the group failed to secure one of the three casino licences in upstate New York.

Shares of Genting Malaysia fell as much as 18 sen to RM3.89 before paring losses. At 10.37am, the stock was traded at RM3.94, making it the second-largest decliner across Bursa Malaysia.

Some 4.41 million shares were traded. For comparison, the FBM KLCI rose 18.41 points or 1.1%.

Reuters reported that New York state had approved three casino developments worth $1.4 billion on Wednesday that promise to add more than 5,000 jobs to the sluggish upstate economy and generate around $300 million in tax revenues for state coffers.

New York selected Montreign Resort and Casino to build a $630 million development in Thompson in the Catskills. Rivers Casino and Resort won in Schenectady with a proposal for a $300.1 million resort and 50,000-square-foot (4,645-square-metre) casino.

Lago Resort Casino won with a $425 million proposal to build a 94,000-square-foot (8,733-square-meter) casino in Tyre. The remaining 13 proposals were rejected, including the $1.5 billion Sterling Forest Resort by Malaysia's Genting, Southeast Asia's biggest gaming group.

Today, analysts cut their target prices (TP) for Genting Malaysia shares on the news.

CIMB Investment Bank Bhd lowered its TP for Genting Malaysia to RM5.51 from RM5.90. CIMB, however, maintained its “add” rating on the stock.

“While we are disappointed by the decision, Genting Malaysia remains an "add" as valuations remain compelling. Our revised net asset value (RNAV)-based target price is lowered as we remove our 39 sen RNAV estimate from NY (New York).

"The state board chose three developers that excluded any bids in Orange and Ulster counties," CIMB said in a note to clients. CIMB said both of Genting Malaysia's bids were located in Orange county.

Meanwhile, Maybank Investment Bank cut its TP for Genting Malaysia to RM4.60 from RM5.05 previously. Maybank, however, retained its "buy" call on the stock.

"We leave our earnings estimates unchanged but cut our TP to RM4.60 from RM5.05, attributed to our belief that Genting Malaysia will win at least one license," Maybank said.